Argentina: how desperate governments steal your money

Such is life in Argentina these days, where anyone and everyone is under the microscope to pay for President Christina Kirchner’s madness and economic totalitarianism. She’s made it illegal to spend money outside the country. Forced Argentines to hold rapidly deteriorating pesos. Imposed price controls and banned grocery coupons. Shut down dissent in the media.

As Buenos Aires expat Jerry Nelson told me recently, the place is falling apart. That’s no surprise to anyone who has paid attention over the dozen years since the last “Corralito” where Argentina took quick steps to bankrupt most of their people.

No doubt, Cristina is one of the most anti-market forces in the world. She’s squandered vast amounts of Argentina’s natural wealth pushing to turn it into a socialist gulag. But like every desperate government, there are a series of steps to be played out in times like this. One of those steps is to scapegoat everyone you can to hold onto power as long as possible.

Cristina’s latest ploy is to chase down the evil “tax evaders” with an estimated $160 billion in offshore accounts. The actual amount is indeterminable since Cristina’s trashing of the Argentine peso has created a black market that reflects the true value of the fallen currency. To those who have chosen to park their funds safely outside of this madman’s grasp, she offers a choice.

Specifically, the proposal would force those with the foresight to create an escape hatch for their money to buy bonds yielding 4% to fund Argentina’s state-owned oil company. Nothing wrong with that, except that the state-owned oil company was stolen. After the government privatized it and sold it to a Spanish company in the 1990s, Cristina came in and took it right back last year. “It’s Mine!”

As for the 4% yield, it’s less than one-third the yield for other Argentine debt. In fact, nobody wants to touch anything in Argentina. No market wants to give them any money. Even their leftist allies in central and South America are leaving them for dead. Heck, you can get 20% or more throwing a few pesos into an Argentine bank account. That’s how bad things are and how rampant inflation is.

Which shows exactly how Big Government works. The great dictator Cristina Kirchner knows she’s tanked the country. So she creates a sideshow – this time ramping up oil production – to try and keep the serfs happy. After all, the country’s despair is the fault of the evil rich and those who have lives and/or money outside Argentina. They haven’t paid their “fair share” and we’ve got to make them pay.

Sound familiar?

You can say these evil-doers have it coming to them. How dare they keep any money outside of Argentina? But you have to ask: wouldn’t you?

Would you keep your money tied up in banks where you were forced to hold a local currency that was plummeting in value? In a country run by a woman who has proven time and again that she feels ANYTHING she wants is hers for the taking? Where strict capital controls forbid you to leave the country with barely anything of value in case things get even worse? In predictable fashion, Argentina has even outlawed the exchange of increasingly worthless pesos into gold.

When you consider that Argentines seem to have revolution coded in their DNA, it’s not a place I’d want to be hanging around when things REALLY hit the fan.

And as if you should be surprised, the Argentine government’s mad dash to grab all the private wealth they can has led to quite the surveillance state. They’ve long been spying on individuals’ credit card bills and any other data they can get their mitts on to stop the mass capital flight and keep as much as they can within arm’s reach.

You can moralize against these “tax evaders” all you want, but when all your morals come from what a corrupt, tyrannical government tells you, it’s time to re-think. Would you suggest that the Jews keep their money, possessions, and themselves in Nazi Germany? Would you not flee when a madman threatened to wipe out everything you had and control your every move? When 36% of your country’s GDP is tucked away offshore by individual savers, you know the government has done something wrong.

Even Cristina herself knows this, considering it’s an open secret in Buenos Aires that she and her family have personally pilfered millions of dollars now held in European bank accounts. She’s no dummy; she just hopes you are. Government is the biggest proponent of “do as I say…”.

After all, this is the same government that confiscated bank CDs and forced depositors to turn them into government bonds. You know, like the ones they defaulted on? A decade ago, the government forced savers to convert their US dollar deposits into peso deposits.

Argentina makes Cyprus look like a picnic. This is part of the playbook when governments get desperate enough. Long gone are the populist, cheery-sounding promises of “lifting people out of poverty”. Such promises are replaced by thuggish demands for anything of value you have to be turned over to Big Government. When things get bad enough, they no longer even pretend to care about you, Joe Citizen. It’s all about plugging the holes and keeping their control.

But what was it ever about to begin with?

If you liked this article and are curious how to apply the Nomad Capitalist lifestyle for yourself, check out the quick video below. Then, if you'd like some help doing it, click here to let me know.

Andrew has been internationalizing since 2008, and has learned what works and what doesn't work when it comes to reducing taxes, increasing personal freedom, and creating wealth. Click here to work with him personally.

23 Comments

Scenes like this and Cyprus are just the foreshadowing of what will happen in the United Stasi of America once interest rates start to increase and the interest on $20-trillion has to be paid every month. As you know, 40 cents on every dollar of gov’t spending is already borrowed and that number will have to increase. At some point there is not enough to borrow. It’s a mathematical certainty it will end very badly.

I have heard a lot of bad things happening in Argentina from Argentine people here in the US. I remember my Dad telling me how in Spain during the Facist dictatorship of Franco how people would smuggle their money out of the country and hold it in Swiss bank accounts as well as other places which is what i think is happening in Argentina. I’m sure the “Marketa Negra” is really the only economy in town that is actually working. Its just a shame.

No matter what the Gov does people will always find a way to get over on the government.

morgan
on May 17, 2013 at 4:08 pm

except they’re not really getting over on the government, they’re surving _despite_ the government. government doesn’t have some inherent right to people’s money, it is there to protect a border and minimum safety to produce money. for people. except in the world today, of course.

reg
on May 17, 2013 at 12:25 pm

sounds like time for another Malvinas crisis

Dave6034
on May 17, 2013 at 2:12 pm

This is a common problem across Latin America. The wealth is produced in rural areas but the voters are concentrated in cities, where they vote for ever higher taxes on the wealth creators. When this burden becomes too great, the ranchers and miners sponsor a military coup. The new junta cuts the government down to size, telling students, bureaucrats, and the indigent to get their handouts elsewhere, and that real bullets will be used on them if they riot.

Until 1989, the USA supported pro-capitalist coups wherever they happened. If Argentina had one today, it would be immediately cut off from the world banking system and most of its export markets.

One day the USA will go bankrupt, and democratic socialism will collapse around the world as quickly as totalitarian socialism crumbled in 1989. Until then, Argentina’s stuck with it.

favill
on May 19, 2013 at 2:59 am

I guess this is the “just” rewards a country that gave safe haven to former SS officers and soldiers. The English translation of NAZI is national socialist…I guess having a few thousand of these made a politically crappy country even crappier.

It’s not just reward for the majority of people who had nothing to do with safe-haven for Nazis almost 70 years ago. Regular folks in Argentina are getting their property stolen by the State. (If you want to debate that NASA benefited from harboring Nazis, that’s another story.)

That wasn’t the people, that was Peron’s government. He was a militar, btw. Totally right-winded despite his puppet wife and all the demagogy.

Fred
on May 26, 2013 at 11:36 pm

Just remember one of those “NAZIS” led one man to the moon. and this happened in U.S.A , Argentina received immigrants from around the world, our borders are open to all people of the earth. even when United States closed the doors to Jewish exiles before and during WWII

Sabri
on May 29, 2013 at 5:56 am

It is not just for us people living here, so mind your words. The Government does not, actually, represent all the pople living in this country.
I dare you to try to survive a whole month here.

the ignorance and impartiality of this post is huge, you’re missing a big part of the cake to understand the socioeconomic argentinian reality, and what liberal and market governments have done with our country (and with %90 of the rest of the world)

Gaucho
on June 1, 2013 at 10:53 am

It seems like the ultraneoliberalism people are a little nervous. Clarin style”

Sergio648
on June 3, 2013 at 11:00 am

This article doesn’t have a single piece of accurate and truthfull information.
I’m a citizen of this so called, tyrannic, Stalinist, Nazi, country, aka Argentina.
This is not a dictatorship, is a democratic goverment. With a working Congress that debates and passes the bills to turn them to laws.
Nothing was stolen, or seized.
I’m outraged that so many lies can be written because I doubt many people actually have a chance to came see how things really are, and have to trust in this tipe of neoliberal and selfish person who confuses individual freedoms with savage capitalism.

you may be able to block the comments here but you cant everywhere. Be sure it will be spread far and wide that you are a cheap rip off and an unoriginal hack.

nomadcapitalist
on July 11, 2013 at 11:13 am

Lots of people have sites discussing these issues. Dozens if not hundreds. We focus on our own site, not other peoples’ sites. Myself and others live the lifestyle we write about and always have – how that is a cheap rip-off is beyond me. If you’d like to have a real conversation about ways we can improve, let’s do that. If you just want to flame nasty comments, please find another site to do that on. Your obsession with doing it makes you seem less than impartial.

Reaper987
on August 1, 2013 at 5:01 am

Hey jason123 you sound like the fuckin fat guy who sits in the bleachers drinkin diet coke & eatin zagnuts and criticizes those on the field who actually do something & want to play. Shut your douche bag mouth you shit salesman with a skull full of samples..

Mia
on July 18, 2013 at 3:44 pm

All true! Majoring in Finance and Investments, my international business professor would use Argentina as an example of how things SHOULD NOT BE DONE. Also every single individual I met here, in the USA, that were born in Argentina, they stayed here, even with an out of status VISA here. Got to have a life. No more surviving everyday for them. No more assaults, in one word, they got a real and safe life 🙂